Spending by your favourite department
CRA isn’t a big spender in relation to its departmental siblings. While its roughly $4-billion annual budget amounts to less than 2% of total government spending, we’re always interested in what our friendly neighbourhood tax collector is doing with public dollars.
CRA’s total spending was $4.1 billion in 2015–16, down slightly from five years earlier. Personnel expenses (salaries, other allowances and benefits) represented 74% of total expenses, the agency says. The remaining 26% of spending came from other costs such as accommodation and information-technology related expenses.
Boosting tax compliance
CRA expects to collect billions more for the government as the agency receives additional funding from Parliament for tax compliance efforts. That likely includes much more auditing.
The Trudeau government’s 2017 budget allocated an additional $523.9 million to CRA over the next five years to hire more auditors to work on tax evasion and tax compliance.
The new funding will be used to increase CRA’s verification activities; hire specialists to focus on the underground economy; develop business intelligence and risk assessment systems for high-risk, international tax cases; and step up investigations of criminal tax evasion. The previous year’s budget provided $444 million over five years to boost CRA’s tax evasion and avoidance efforts.
The 2016 federal budget estimated tax compliance improvements would reap additional federal revenues of $2.6 billion, while the 2017 budget measures account for another $2.5 billion over five years.
Initial steps were already being taken, the government said in March, “to prevent wealthy individuals from using private corporations to inappropriately reduce their tax payable.” As Advisor.ca has thoroughly reported, the Finance Department is also reviewing income sprinkling and passive investments for small business corporations.
Rest assured, the Finance Department says: CRA has a “proven track record of meeting expectations from targeted compliance interventions.” In other words, be afraid.
CRA budget summary for program and internal services (dollars)
|Assessment of returns and payment processing||649,108,155||640,377,518||606,377,627||503,182,149||496,115,166|
|Collections and returns compliance||496,787,602||519,837,234||495,342,255||632,051,666||618,542,264|
|Total all programs||4,062,859,356||4,060,833,990||4,146,987,294||4,085,718,183||3,931,353,039|
CRA, much as it tries, can’t collect everything owed to it.
The agency’s total allowance for “doubtful accounts”—or debts it doesn’t expect to collect—was $13.8 billion as of March 31, 2016. That’s risen from $5.7 billion at the end of fiscal 2004–05, according to an Ottawa Citizen report.
“In some cases, despite the CRA’s best efforts, some tax balances cannot be collected and need to be written off. This amount represents less than 1% of the $501 billion in tax and other revenues collected,” says David Walters, a CRA spokesperson.
He says that, in 2015–16, 93% of individuals and 86% of corporations filed and paid their tax returns on time, “without CRA intervention.” The same year, Walters says, the agency recovered more than $52 billion in outstanding tax debts.
What CRA collects
CRA collects a wide range of money owed to government, not just income tax, corporate tax and HST remittances. These include:
- customs, excise and other levies,
- benefit overpayments such as Canada child benefit or GST/HST credits,
- defaulted Canada Student Loans,
- Employment Insurance overpayments and penalties,
- Training Allowances Payment System overpayments,
- Canada Pension Plan overpayments,
- grants and contributions overpayments,
- operations and maintenance receivables,
- other Employment and Social Development Canada program overpayments or penalties.
Total uncollected receivables, including taxes, interest, penalties and other assessed revenues, were a net $105.2 billion at the end of 2015–16, after accounting for the $13.8 billion in doubtful accounts. Uncollected receivables, a significant portion of which relate to the current fiscal year but are not due to be paid by taxpayers until the next one, had risen from $96.9 billion owing at the end of 2014–15.
Net uncollected receivables
|Individuals||$48.5 billion||$53.9 billion|
|Corporations||$14.7 billion||$15.7 billion|
|Employers||$16.8 billion||$18.9 billion|
|Non-residents||$1.3 billion||$1.4 billion|
|Miscellaneous||$1.3 billion||$1.1 billion|